The Majlis Joint Commission decided to double marriage loans to newlyweds in the March 2022-23 budget. The commission is an ad hoc parliamentary body comprising representatives from all parliamentary commissions and responsible for reviewing the budget bill.
“Each of the partners who tie the knot from March 2018 to March 2023 will get 1.2 billion rials [$4,528] in marriage loans,” Rahim Zare'e, the commission’s spokesperson was quoted as saying by IBENA.
To encourage early marriage, banks are required to grant 1.5 billion rials ($5,660) per partner if the bride is below 23 years and the groom under 25.
Marriage loans are interest-free and should be repaid in seven years. Couples can apply for loans maximum up to two years after the pronouncement of their marriage.
As per budgetary rules for the present fiscal year, each couple can borrow 700 million rials and one billion rials if the bride is below 23 years and the groom under 25.
Over the years marriage loans have increased due to runaway inflation and the decline in the purchasing power of the rial depriving many young people from tying the knot.
Lenders are also required to pay needy families and less privileged households self-employment loans up to 207 trillion rials ($781 million).
According to Zare'e, banks should allocate 2,000 trillion rials ($7.5 billion) of their interest-free resources for the above-mentioned purposes next year.
In response to the legislation, Mostafa Qamari-Vafa, head of CBI public relations department, urged the parliament to rethink the mandatory loans mentioned in the budget with due consideration to banks resources.
“This [loans] will add to the shortage of liquidity in banks, which will lead to overbrowning from the CBI,” the official said on Twitter, adding that the outcome will be higher inflation and more public dissatisfaction.
Banks have been under renewed pressure as they have to meet budget targets and comply with the regulator’s demands to improve their balance sheets.
Lenders are strongly criticized by economists and experts for weak balance sheets, mismanagement and opaque lending practices resulting in mountains of bad debt and their demonstrated inability to recover NPLs. The CBI insists controlling bank balance sheets is instrumental in curbing the ballooning money supply.
